You request them from your tenants and your vendors. You look quizzically at them when they arrive on your desk. Your boss asks you to make sure that they are current and valid. You file them away and hope that you remember to ask for them next year when they renew. You purchase access to systems that help you to ensure that they are current, maintain renewals, and organize and store them efficiently. All the while you wonder, “Why is a Certificate of Insurance so important to my company, my boss, and to my job?”
A Certificate of Insurance (better known as a “COI”) is a snap shot of the holder’s current insurance coverage at the point in time it is issued. It lists all points of coverage including additional insureds – named parties who are covered by the policy, but are not the original holder of the policy. By the way, that’s you.
Your real estate management company must be a named as an additional insured on all of your tenant and service company insurance contracts in order to protect your organization against risk and liability created by the negligent acts of your tenants, employees or service providers. Additionally, that change to their policies must be endorsed by the covering insurers. Not only does this effectively spread the risk to your organization and its insurer, it ensures that when things go badly on your property due to the negligent actions of your tenants, their visitors, or your service providers, your organization enjoys the same protections provided to them by their insurance companies.
Here are the top 10 secrets to better COI Management:
- Request a valid Certificate of Insurance from each tenant and vendor that shows your organization named as an additional insured. Then, make sure that you get it. Send them an example certificate so that there is no confusion.
- Formally request that your organization be added as an “additional insured” on all of your tenant and vendor’s general liability insurance policies. Check the spelling of your company name carefully when you get the COI.
- Read the coverage limits on the COI to make sure that they comport with the insurance coverage requirements of your leases with your tenants and all service contracts executed with your vendors.
- Request changes to coverage limits if they do not meet the minimum requirements outlined in your own contracts and leases.
- Ensure that the tenant or vendor’s insurance company has actually endorsed the addition of your company as an additional insured. A COI is not an endorsement, so check the policy and get a copy of the endorsement from time to time.
- Read the endorsement carefully, particularly any amendments of exclusions noted on the endorsement or COI that change the coverage provided by the GL policy.
- Record the coverage period for each policy as expressed on the Certificate of Insurance and set a reminder in Outlook, your Operations Management System, or your PDA well in advance of the renewal date to make sure that you request an updated COI each year.
- Check any changes to required limits of coverage annually – both to your own policy and your tenant and vendor policies.
- Send copies of all certificates (in electronic format) to your insurance agent and to your insurance company.
- Purchase an effective web-based operations management system with a certificate of insurance tracking program to help you to effectively manage this process.